Transactional and Transformational Leadership

Two dominant leadership styles are transactional and transformational leaderships.

Transactional Leadership: Attempts to create employee satisfaction through negotiation for levels of performance that is “bartering” for desired behavior. It focuses on making certain that the required conduct and procedures are implemented. The use of negotiation is barter to achieve the desired outcomes results in a dynamic relationship between leaders and employees in which reactions, conflict and crisis are more influential than ethical concerns. Transactional leaders produce employees who achieve a negotiated level of required ethical performance or compliance. As long as employees and leaders find the exchange mutually rewarding their compliance relationship is likely to be successful however transactional leadership is best suited to changing ethical climates quickly or reacting to ethical problems or issues.

Transformational Leadership: Transformational leaders try to raise the level of commitment of employees and create greater trust and motivation. They attempt to promote activities and behavior through a shared vision and common learning experience. They communicate the sense of mission, stimulate new ways of thinking and enhance as well as generate new learning experiences. They consider the employees’ needs and aspirations in conjunction with organizational needs. They have a stronger influence on co-workers support and building of an ethical culture than transactional leaders. Transformational leaders also build a commitment to and respect for values that provide agreement on how to deal with ethical issues.